April 28, 2009 / 11:21 AM / 11 years ago

UPDATE 2-Heidrick posts surprise loss, to cut more jobs

* Q1 adj loss/shr $0.68 vs. EPS estimate of $0.04

* To cut jobs by a further 8 pct to 10 pct in May

* Double-digit rev declines across regions * Shares tank as much as 22 pct (Adds details, share movement)

April 28 (Reuters) - Executive recruiter Heidrick & Struggles International Inc (HSII.O) posted a surprise first-quarter loss, and said it would cut more jobs, sending its shares down 22 percent.

“Each of our practice groups and every region experienced double-digit revenue declines in the first quarter,” Chief Executive Kevin Kelly said in a statement.

The company, which is one of the two publicly traded executive search firms in the United States, said it would reduce headcount by about 8 percent to 10 percent in May and incur a charge of $6 million to $10 million in the second quarter.

Heidrick, which had already cut about 200 jobs earlier, said it is also cutting discretionary bonuses and reducing base salaries by 5 percent, adding that its senior leadership would forego one-month salary.

Search confirmations hit a low in December and showed a modest but steady improvement through March, Kelly said.

Number of executive searches confirmed in the first quarter decreased 38.4 percent year-over-year and 6.8 percent sequentially.

“Even if the level of first-quarter search confirmations persists through the remainder of the year, our goal at the operating income line is to run the business at a minimum of breakeven, excluding restructuring charges,” Kelly said.

The company still anticipates an improvement in business in the later half of the year.

For the quarter ended March 31, the company posted a net loss of $18.9 million, or $1.15 a share, compared with a profit of $7.1 million, or 38 cents a share, a year ago.

Excluding restructuring charges of $13.4 million, the company posted net loss of 68 cents a share.

Revenue fell almost 42 percent to $89.1 million, below Wall Street estimate of $107.9 million.

Revenue from the Americas slumped 40 percent while that from Europe declined 47 percent.

Earlier in the day, temporary staffing company Kelly Services (KELYA.O) posted a wider-than-expected loss and saw revenue drop about 25 percent. [ID:nBNG232312]

Kelly Services, which serves the financial, education, healthcare and engineering markets, also cut jobs and incentives, a company executive said on its conference call, adding that it has also implemented a hiring and salary freeze.

Both Heidrick and Kelly Services recently amended their credit facilities.

Heidrick shares fell $3.95 to $19.34 Tuesday afternoon on Nasdaq. They had fallen to a low of $18.11 earlier. Kelly Services shares were up 3 cents at $10.44. (Reporting by A.Ananthalakshmi and Biswarup Gooptu in Bangalore; Editing by Anil D’Silva and Deepak Kannan)

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